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Shine Lawyers (ASX: SHJ) has filed a class action against one of the country's largest superannuation funds, alleging Rest Super wrongfully deducted income protection insurance premiums from members for more than a decade, including for policies that at times offered little or no coverage.
Shine Lawyers’ practice leader Hadi Boustani says the class action is seeking compensation for insurance premiums that were allegedly unfairly deducted, and up to 500,000 members could be affected.
"This class action alleges that between December 2008 and June 2019, Rest Superannuation (Rest) signed up new members to income protection insurance by default, without the member actively choosing to sign up to the policy," Boustani explains.
"We also claim that when members did not make any contribution to their Rest account for 13 continuous months or more, the default income protection insurance policy did not provide the member with any coverage and when members held multiple income protection insurance policies at the same time, the Rest income protection policy provided little to no coverage.
"This was money down the drain for fund members who paid a premium for no benefit."
Shine Lawyers client, Jarrod Lane, has registered for the class action to demand accountability from his super fund.
Lane was not earning an income for more than three years between 2018 and 2021, and believes he was charged for income protection insurance that he could never claim on.
“I felt it was important to join this class action because what Rest has done is wrong and they should compensate those who were affected," Lane says.
The action is being funded by Woodsford, a leading global ESG (environmental, social and governance), access to justice and litigation finance business.
"Everyday Australians trust their superannuation funds to look after their hard-earned dollars which they have invested for their retirement," says Clare Owen, director and head of origination at Woodsford Australia.
"Having sufficient superannuation to fund retirement is so important. Woodsford is pleased to be supporting this action to assist those everyday Australians in recouping losses to their superannuation which has been unfairly eroded."
The class action was listed for a case management hearing on Friday 16 February, 2024 in the Federal Court. Justice Button made orders including for Rest to file its defence by the 28 March 2024.
Rest Super currently has around 1.9 million members and $80 billion in funds under management. A spokesperson says Rest intends to defend the class action.
"As a profit-to-member fund Rest has at all times focused on the best financial interests of members. Rest’s group insurance cover is and has always been designed to meet the needs of our members," the spokesperson says.
"Offering default income protection cover to Rest members is a highly valuable benefit and supports members who are unable to work due to illness or injury. Many Rest members work part time and would not be able to obtain income protection cover by any other means or at a reasonable cost.
"Last financial year we paid out around $222 million in benefits to members across more than 10,000 income protection claims."
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